Arif Durrani: Google needs to change its approach to HMRC

Google is in trouble with HM Revenue and Customs and it could get ugly unless the internet giant starts to change the conversation.

Arif Durrani: head of media, Campaign / editor of Media Week
Arif Durrani: head of media, Campaign / editor of Media Week

Nobody likes paying tax, but in the current climate, and with a renewed focus on "tax dodgers" from our Government, the company’s contribution of £6m in 2011, on revenues of £2.6bn, could yet prove to be a stretch too far. By way of comparison, ITV paid £80 million in tax last year.

Google is £218m short, according to tax experts, and appears to be backed into an unseemly corner in having to claim the bulk of its ad sales are closed in Ireland. For a lively London operation, dealing with agencies through hundreds of sales executives - past and present - that we all know and love, it feels untenable.

Starbucks took most of the flack the last time the Public Accounts Committee started fingering international companies for aggressive tax avoidance in November. The glare of the spotlight, shone unflinchingly by committee chair and Labour MP, Margaret Hodge, resulted in an unprecedented acquiescence by the coffee chain.

'For a lively London commercial operation, dealing with agencies through hundreds of sales executives - past and present - that we all know and love, it feels untenable'

In the days that followed, a flailing Starbucks offered to pay £20m in voluntary taxes over the next two years. It was met with derision, but helped improve its public standing nonetheless. "I don't think you can volunteer paying your tax," Hodge had reminded. "The tax you owe is a duty. It's an obligation."

At the time, Havas' global chief executive, David Jones, was in no doubt about the direction of travel, telling me, "I think Google and Amazon are next". For the man who last week was named The Guardian’s ‘Sustainable Business Leader of Year’, "transparency, authenticity and speed" are the new rules to which a modern business must adhere, in a digital age where consumers are empowered.

It's hard to argue with Jones' fundamental belief that it’s a mistake for companies to think these issues will simply go away, open dialogue with the authorities about how the process currently works, and how it can be better managed in the future must be the way to go. Google is far from the only foreign company to minimise its UK corporate tax, but as our biggest media owner with tentacles stretching far and wide, escaping the gaze really is not an option.

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